A forum for critical debate...

. . . on unemployment and employment, income distribution and inclusive growth in South Africa. It publishes accessible research- and expertise-based contributions. The forum encourages debate on an integrated and consistent policy response to unemployment, inequality and poverty and a strong engagement between research and policy making. We invite contributions from economists and other social science researchers, policymakers and relevant experts.

Graduate unemployment

The transition from higher education to employment is a challenge, considering persistent graduate un- and underemployment. Qualifications are not enough. Graduates (should) develop a ‘workplace identity’ that improves their chances of being employed. An empirical study shows that achieving employability frequently involves several labour-market states in which personal attributes are utilised but also developed. Most graduates are not prepared for this arduous journey, something both higher education institutions and graduates should attend to.

The frequently reported ‘crisis in graduate unemployment’ in South Africa is a fallacy based on questionable research. Not only is graduate unemployment low at less than 6%, but it also compares well with rates in developed countries. The large expansion of black graduate numbers has not significantly exacerbated unemployment amongst graduates. Contrary to popular perception, such graduates – many from ‘formerly disadvantaged’ universities – have been snapped up by the private sector. Black graduates are, however, still more likely to be unemployed than white graduates.

Adcorp’s unemployment figures are derived from weak research and is repeated too often by gullible journalists. Based on a flawed methodology and dubious assumptions, the Adcorp figures imply that only about a million people are unemployed and that the total unemployment rate is 5%. At the same time, Adcorp has published an inflated figure for graduate unemployment (600 000) – a grave inconsistency. Whilst serious researchers will not touch Adcorp data, it can harm decision-making by policymakers and potential university students and their parents.

Editor's Corner

Econ3x3 readership statistics:750 reads per day on average; reads in previous 12 months: 275 000. Up to March 2017 (since launch in Dec. 2012): total 800 000 reads; average 10 000 reads per article. About 35% of site visits are from outside South Africa; about 13% from Kenya.

INTERESTING STUFF from elsewhere...

The fourth industrial revolution in Africa: potential for inclusive growth?Wim NaudeAround 170 million Africans will enter the continent’s labour market between 2010 and 2020. African policymakers consider industrialization as the way to create employment opportunities for these new labour market entrants. With new technological changes and the rise of robotization, how can industrialization ensure inclusive growth? [From The Broker.] Why new entrants struggle to break into SA's retail spaceReena nas NairA handful large supermarket chains hold over 70% of the national market share. This is indicative of the barriers to entry and expansion faced by new entrants, which make it difficult for entrepreneurs, particularly historically disadvantaged ones, to meaningfully participate in this space. It is crucial to open up the market to allow a diversity of retail formats to flourish. [From The Conversation.]

Making the jump from academic research to the policy jungleNeva MakgetlaIt is crucial that academics help policy makers. They have greater objectivity, expertise and in-depth understanding than most analysts. But translating their research to the jungle of government policy making takes effort. They must be willing to take the time and grief to generate useful, even second-best, policy options that meet the hard imperatives of a complex and divided society. [From The Conversation.]

Free tertiariy education will escalate inequalitySteven FriedmanMoney is available for free post-school education, but only if there is less for other public services. Free university is affordable only if programmes that serve the poor — social grants, primary health and, for that matter, basic education — are reduced. That will increase, not reduce, inequality. Public services can reach all the people who need them only if the more wealthy, who can pay their share, do. [From Business Day.]

Class and race shape how young people access the job marketGlenda KrussSocial networks remain the main method of job search for many. But the ability to access social networks is shaped unequally by the education, class and race background. This is particularly the case for jobs that require a university qualification: which university you come from, matters a great deal. For job seekers from poor rural areas, social networks are less helpful. This is why formal public mechanisms are important, particularly for those looking for low-level skilled jobs. [From The Conversation.]

Why it doesn't make sense that all informal mining is deemed illegalKgothatso NhlengetwaA distinction must be made between illegal mining and informal mining, such as women mining semiprecious tiger’s eye quartz in the Northern Cape. Informal mining often is community based and follows customary law; no trespassing of land takes place – it is very different from zama-zamas. It is time for these practices to be formally recognised in law, thereby enabling small-scale informal mining to be developed whilst dealing with invasive mining as illegal. [From The Conversation.]

Economic growth isn't over, but it doesn't create jobs like it used toMartin FordUnlike innovations in 1870-1970, which were powerful job creators, information technology and artificial intelligence is going to make innovations in the future less labour-intensive. Unless we change our economic rules — perhaps with something like a guaranteed income — the resultant growth will not translate into broad-based prosperity. The innovations may come, but the people at the top of the income distribution will continue to capture nearly all of the gains. {From the Harvard Business Review.]

Can agriculture sustain a nourishing rural non-farm economy?Andries du Toit, Univ. of the Western CapeAgricultural development can only serve inclusive growth if it also contributes to the rural non-farm economy, becoming a hub for forward and backward linkages into the local economy. Apart from pro-smallfarmer land reform, this requires support for local retail and informal markets often disregarded by urban planners. Policies should protect informal growers and retailers from being swamped by large-scale agriculture and corporate retailers in rural markets. [From The Conversation.]

Why the voice of Africa's informal economy should be heardTerence Jackson, Middlesex UniversityThe informal economy in Africa is big business. But governments and organisations like the World Bank and ILO do not like the informal economy. Policy has veered from supportive to antagonistic. Many governments are unaware of the contribution of the informal economy, which has a weak voice. Policymakers must start listening - to formulate inclusive policies more relevant to Africa’s development. [From The Conversation.]

The informal sector in Africa is here to stay. Are city governments ready for this challenge?Louise Fox,University of California, BerkeleyProductively employing Africa’s ‘youth bulge’ is an urgent urban development problem. Sub-Saharan Africa has the youngest population in the world. High fertility (even in urban areas) and rural-urban migration means that new workforce entrants – mostly youth – are looking to urban and peri-urban areas for employment. Are urban leaders ready for this? [From The Broker.]

Education is not the cure-all for economic problems it is made out to beSteven Friedman, University of JohannesburgJust about everyone agrees that more and better education is a solution to most of our economic problems, including inequality. However, education often produces inequality. Education is not a miracle cure and the fixation with its supposed healing powers may divert us from tackling our deeper problems. [From Business Day.]

How high unemployment has eclipsed the plight of South Africa's working poorMike Rogan & John Reynolds, Rhodes UniversitySince 2006, more than one-fifth of South Africa’s total workforce has been living in households which are not able to meet their basic minimum food and non-food requirements. Unemployment is the main concern for about half of the poor population while low earnings or the poor quality of work is the concern for the other half.[From The Conversation.]

How current measures underestimate the level of poverty in South AfricaJosh Budlender, Ingrid Woolard & Murray LeibbrandtA review of South Africa's measures of poverty shows that close to 63% of people in the country are poor. This is significantly higher than the usually-quoted StatsSA figure of 53%s, which is based on their (adjusted) upper-bound poverty line.[From The Conversation.]

Articles from Project Syndicate

Where will all the workers go?Daniel Roubini, New York UniversityRecent technological advances have three biases: They tend to be capital-intensive; skill-intensive; and labor-saving (thus reducing the total number of unskilled and semi-skilled jobs in the economy). Robotics and automation will continue to displace workers in blue-collar manufacturing jobs. Eventually, technology will replace manufacturing and service jobs in emerging markets as well. Training workers in the relevant skills may not be sufficient to absorb workers, in which case it will become necessary to provide permanent income support to those whose jobs are displaced by software and machines.

Articles from The Broker website - perspectives from Europe:

Embracing inclusive growthEvert-Jan Quak, The BrokerNow that economists more and more accept the idea that inequality is rising in most parts of the world and harms sustainable economic growth, the obvious next step is to change the policies that cause it. Is redistribution enough? Or do we have to go further to embrace inclusive growth?

Unleashing those constrained gazellesMichael Grimm, University of PassauSMEs can and need to play an important role in securing and creating new jobs, if development programmes revert their focus to job creation with the help of effective training and restructured access to finance.

Employment needs more than GDP growthFrans Bieckmann, The BrokerThe prevailing assumption that GDP growth alone will generate more decent work is not valid. And it obstructs the creation of a society in which labour serves and dignifies both the individuals and the collective. Labour is more than a mere input for economic growth.

*****************************The three Rs...

READ, WRITE & REASON

Econ3x3 provides a platform to promote robust economic policy discourse in South Africa. The complexity, but also sterility of public debate on many policy issues, demands that knowledgeable individuals engage in robust debate. This can inform other individuals and policymakers on issues that they deal with in day-to-day policy making or policy analysis.

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